Millions of lives could be saved if drug companies weren’t limited by a patent model that dates back to the 15th century . The problem is that when the patent on a drug runs out, drug prices plummet, creating a patent “cliff” that leaves pharma companies with almost no incentive to repurpose off-patent drugs for new uses.
In particular, clinical trial data showing which off-patent drugs are safe and effective treatments for new diseases is “highly non-excludable”, “unmonopolizable” or “public good” information which is almost impossible to stop people from using, even with a patent (pdf).
The Problem: Misaligned Incentives
Off-patent or “generic” drugs that have successfully completed Phase 1, 2, and 3 clinical trials for safety and efficacy are, in principle, available to be re-patented as reformulations or new uses to treat new diseases. As such, these compounds could be used to treat another health condition without having to undergo much of the time-consuming testing—since it was done for the initial indication.
But companies also lack the incentive to do this if the off-patent version of the drug has similar efficacy and active ingredient to the patented drug, and can also be prescribed off-label, which means it’s difficult to recover the cost of the clinical trials proving the efficacy of the patented reformulation . Further, plant-based medicines including cannabis & psychedelics, and also recreational drugs such as ketamine and MDMA fall within this category of “unmonopolizable therapies” because they are available for relatively low cost from multiple vendors.
A patented reformulation may also be less safe or effective than using the off-patent drug or ingredient in a new way, resulting in potential harm to patients . For this reason, the off-patent drug repurposing dilemma has been referred to by the NIH’s National Center for Advancing Translational Sciences (NCATS) as the “tragedy of the commons”. That’s why governments, health insurers, and charities need to find a new way to incentivize off-patent drug development.
The Solution: Pay for Success Contracts
There is a solution to this tragedy, which should be intuitive. If you want to incentivize somebody, you offer them a prize. Crowd Funded Cures propose establishing financially innovative “pay for success” contracts (e.g. Social Impact Bonds, Advance Market Commitments, Value-Based/Differential Pricing) as an alternative incentive to fix this gap in the patent system.
Under the pay for success model, a generic drug company is promised a minimum pre-order and exclusive subsidized price for their “branded generic” or a flexible outcome payment, only if they successfully repurpose and re-label an off-patent drug by funding the Phase 2 and 3 clinical trials required.
This pay for success financial model can lead to billions of dollars in healthcare cost savings because it can be 100 times less costly and 10 times faster to repurpose off-patent drugs than patent-centric drug development, by relying on existing Phase 1 safety data . Similar proposals to use Social Impact Bonds to repurpose generic drugs to treat rare diseases have been made but have not received backing to date.
Sign The Petition
While social impact bonds are being developed, please sign the petition to ask governments, health insurers, and charities to back off-patent drug repurposing pay for success contracts as a new, open-source approach to incentivize the development of faster, safer, cheaper, and more effective treatments — and cures — for patients, without reliance on patents.
- Kostylo, J. (2008) “Commentary on the Venetian Statute on Industrial Brevets (1474)”, in Primary Sources on Copyright (1450–1900), eds L. Bently & M. Kretschmer, www.copyrighthistory.org
- Sahragardjoonegani, Babak et al. “Repurposing existing drugs for new uses: a cohort study of the frequency of FDA-granted new indication exclusivities since 1997.” Journal of pharmaceutical policy and practice vol. 14,1 3. 4 Jan. 2021, doi:10.1186/s40545-020-00282-8
- Sukhatmem, Vikas. et. al. “Financial Orphan Therapies Looking For Adoption”, Health Affairs, March 6, 2014. DOI: 10.1377/hblog20140306.037370
- Feldman, R.C., Hyman, D.A., Price, W.N. et al. Negative innovation: when patents are bad for patients. Nat Biotechnol 39, 914–916 (2021). https://doi.org/10.1038/s41587-021-00999-0
- Drugs for Neglected Diseases Initiative. “15 years of Needs-Driven Innovation for Access”. Drugs for Neglected Diseases Initiative, Oct. 2019. Available at: https://dndi.org/wp-content/uploads/2019/10/DNDi_ModelPaper_2019.pdf